Ratnamani Metals & Tubes Limited sees a credit rating action

The clearest quantitative upgrade driver was stronger debt-servicing capacity, not a lower reported debt-to-EBITDA ratio. CRISIL upgraded Ratnamani’s long-term rating from Crisil AA/Positive to Crisil AA+/Stable, citing its conservative leverage, net cash position, strong liquidity and healthy cash-accrual generation. ^[1]

• Interest coverage improved materially: adjusted interest coverage rose to 27.56x in FY2026 from 23.60x in FY2025, a derived improvement of 3.96x. ^[2]
• Leverage remained extremely low, although it did not improve year-on-year on the reported gearing measure: adjusted debt-to-adjusted net worth was 0.07x in FY2026 versus 0.04x in FY2025. CRISIL nevertheless described gearing as comfortable because total debt was only Rs 304 Crores against adjusted net worth of Rs 4,187 Crores. ^[3]
• Liquidity strengthened sharply: cash and liquid investments increased to Rs 988 Crores as of March 31, 2026, from Rs 438 Crores a year earlier. ^[1]
• Cash generation remained healthy: net cash accrual rose to Rs 568 Crores in FY2026 from Rs 551 Crores in FY2025. ^[1]
• Debt-service headroom was strong: CRISIL expected annual cash accruals to exceed Rs 700 Crores against scheduled debt repayments of only Rs 19–46 Crores per year. ^[3]
• Future capex was not expected to materially weaken credit metrics: planned group capex of over Rs 1,200 Crores over the next three fiscals was expected to be funded mainly through internal accruals and equity, with only a limited debt component. ^[3]

Important nuance: the rationale does not provide a debt-to-EBITDA ratio. The reported evidence points instead to exceptionally high interest coverage, very low absolute leverage, a strengthened net-cash position and strong liquidity. The upgrade also reflected business-risk improvements—subsidiary scale-up, revenue diversification, order-book growth and operating efficiency—so the financial metrics were a major supporting pillar rather than the sole reason for the upgrade. ^[1]

The AA+/Stable upgrade is consistent with a low-leverage consolidated balance sheet and substantial internal funding capacity. As of Q1 FY27, Ratnamani’s consolidated total debt was Rs 304.27 Crores, comprising Rs 141.13 Crores of current borrowings and Rs 163.14 Crores of non-current borrowings. Cash and equivalents were Rs 73.90 Crores, leaving net debt of Rs 230.37 Crores. ^{[4] [5] [6] [7] [8]}

Debt versus capex

• Consolidated gross debt was only 0.07x equity, while TTM net debt/EBITDA was 0.27x; TTM interest coverage was 26.20x. ^{[9] [10] [11]}
• Management is planning approximately Rs 1,200 Crores of capex over the next three fiscals. ^[12]
• The rating commentary indicates that this capex is expected to be funded primarily through internal cash accruals, rather than a large increase in borrowing. ^[13]

This implies that the current debt load is not the principal funding constraint for the expansion. The key risk is execution and cash-flow absorption: the capex plan is several times the current net-debt balance, so the company will need sustained operating cash generation and disciplined working-capital management to avoid materially increasing leverage. The company’s standalone total debt was nil in Q1 FY27, although the consolidated view remains the appropriate basis for assessing group funding requirements. ^[14]

Expected borrowing cost

There is no explicit management indication that the interest rate or spread on upcoming debt tranches will change, and no specific borrowing-cost guidance was reported. The upgrade should improve the company’s credit standing and potentially strengthen its negotiating position with lenders, but any reduction in the cost of new borrowing remains an analyst inference, not a stated management expectation.

The latest reported consolidated finance cost was Rs 6.17 Crores in Q1 FY27, with TTM finance costs of Rs 26.51 Crores; these figures do not provide the interest rate on future borrowings. ^{[15] [16]}

Verdict: Ratnamani has a strong balance sheet, but it is not the only low-leverage company in this peer set. On a comparable consolidated basis, its TTM net debt/EBITDA of 0.27x is well below Jindal Saw and Gallantt, broadly comparable with Shyam Metalics, but weaker than the net-cash positions of Usha Martin and Godawari Power. The Crisil AA+/Stable upgrade is therefore company-specific, but it does not signal a uniform sector-wide balance-sheet divergence.

Comparable leverage profile

The latest comparable operating data is Q1 FY27, with TTM leverage used as the primary yardstick because quarterly EBITDA can be cyclical.

Negative net debt/EBITDA denotes net cash. Ratnamani’s Q1 FY27 spot ratio of 1.28x is higher than its 0.27x TTM ratio, so the latest quarter should not be read as a structural deterioration without considering the TTM measure. The same earnings sensitivity is visible in Jindal Saw, where the Q1 spot ratio is 10.19x versus 2.10x on a TTM basis.

Ratnamani Metals & Tubes

Ratnamani’s Q1 FY27 consolidated net debt was Rs 230.37 Crores, with total debt of Rs 304.27 Crores; gross debt/equity was only 0.07x and interest coverage was 29.14x ^{[8] [4] [18] [19]}. The CRISIL rating action, based on FY26 financials, reported adjusted debt/adjusted net worth of 0.07x, interest coverage of 27.56x, and cash plus liquid investments of approximately Rs 988 Crores ^{[2] [1]}.

Its long-term bank-facility rating was upgraded from Crisil AA/Positive to Crisil AA+/Stable, while the short-term rating was reaffirmed at Crisil A1+ ^[1]. The upgrade was supported by business diversification, order-book visibility, operating efficiency, liquidity and conservative leverage—not leverage reduction alone ^[1].

Jindal Saw

Jindal Saw is the clear leverage outlier. Its Q1 FY27 net debt was Rs 4,284 Crores, gross debt/equity was 0.37x, and interest coverage was only 3.88x ^{[40] [22] [23]}. Its TTM net debt/EBITDA of 2.10x is substantially above every other company in the comparison ^[21].

A Brickwork Ratings rationale described Jindal Saw’s business profile and liquidity as supported by its market position, order book and cash accruals, but also highlighted exposure to subsidiaries and group companies ^[41]. The cited rationale does not provide a current comparable rating level, so Ratnamani cannot be ranked against Jindal on rating notch alone.

Godawari Power & Ispat

Godawari Power’s TTM net debt/EBITDA was only 0.09x, with gross debt/equity of 0.07x and Q1 FY27 interest coverage of 18.05x ^{[25] [26] [27]}. Its Q1 FY27 net debt was Rs 120.53 Crores ^[42].

A CRISIL rating update reported that GPIL was net debt-free as of March 31, 2026, with net cash of approximately Rs 700 Crores ^[43]. The difference from the Q1 FY27 KPI figure reflects a different date and/or net-debt definition. No comparable current CRISIL rating level is stated in the cited material.

Usha Martin

Usha Martin has the strongest leverage profile in the set: Q1 FY27 net debt was negative Rs 96.30 Crores, TTM net debt/EBITDA was -0.12x, gross debt/equity was 0.04x, and interest coverage was 55.53x ^{[44] [29] [30] [31]}. The cited material does not provide a current long-term credit-rating level.

Gallantt Ispat

Gallantt’s leverage is higher than Ratnamani’s but remains manageable relative to Jindal Saw. Q1 FY27 net debt was Rs 446.04 Crores, TTM net debt/EBITDA was 0.61x, gross debt/equity was 0.17x, and interest coverage was 24.01x ^{[45] [33] [34] [35]}. A comparable current credit-rating level is not reported in the cited material.

Shyam Metalics

Shyam Metalics reported Q1 FY27 net debt of Rs 884.20 Crores, TTM net debt/EBITDA of 0.33x, gross debt/equity of 0.09x, and interest coverage of 10.38x ^{[46] [37] [38] [39]}. Its leverage is close to Ratnamani’s on a TTM basis, although its interest coverage is lower. The cited material does not provide a comparable current rating level.

What the upgrade says about the industry

The evidence points to a bifurcated rather than uniform industry trend:

• Stronger than Ratnamani: Usha Martin and Godawari Power are in net-cash or near-net-cash territory on TTM measures.
• broadly similar: Shyam Metalics has TTM net debt/EBITDA of 0.33x, close to Ratnamani’s 0.27x.
• Weaker: Gallantt is at 0.61x, while Jindal Saw is at 2.10x.
• Upgrade-specific point: Ratnamani’s CRISIL upgrade occurred even though adjusted debt/adjusted net worth rose from 0.04x in FY25 to 0.07x in FY26; the rating case was strengthened by higher cash and liquid investments, improved interest coverage, better operating margins and a stronger business-risk profile ^{[2] [1] [1]}.

Accordingly, the upgrade reflects Ratnamani’s differentiated credit quality versus the more leveraged part of the peer group, but not a unique balance-sheet advantage across the entire sector. Its rating premium is better understood as a combination of low leverage, liquidity and improving business quality; on pure leverage, Usha Martin and Godawari Power are at least as strong, and in some measures stronger.